Here come the downgrades for Q2 GDP Growth


Another quarter, another round of growth downgrades …

Earlier this week, Catherine Rampell at the NY Times Economix wrote: The Great Growth Disappointment

Second verse, same as the first: The quarter when the economy was supposed to stage its comeback is looking just as bad as its disappointing predecessor.

… after a major bummer of an inflation report, Macroeconomic Advisers, the highly respected forecasting firm, lowered its annualized second quarter G.D.P. forecast to 1.9 percent.

And now from Jeff Cox at CNBC: Goldman Cuts GDP View to 2% as Economy Weakens (ht jb)

[Goldman Sachs] cut its second-quarter GDP outlook to 2 percent from 3 percent … Goldman’s move comes amid a week of disappointing manufacturing indicators from both the Philadelphia and New York Feds that compounded market fears over debt contagion from Greece and other peripheral eurozone nations. …

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Glad to read the whole thing, just to look for and find that ray of hope that things will get better by the end of the year.

Do you recall Kevin Williamson’s Hope is not a Policy,” column?
In it Kevin was critical of both Larry Kudlow (CNBC)and Ralph Benko (FORBES) for desiring policies leading to 5% growth.
Kevin said, expect 2%.

Now, 2% doesn’t sound like a lot, but it does lead to the GDP doubling every 35 years.
Austerity policies could lead to a continued 2% growth for the present, opening the way to a higher growth later when austerity pays off.
See, Congress has the purse strings, not for the economy, but for the government.
Congress can impose a less imbalanced budget it cannot legislate growth except tangentially.
If we arrest the piling up of debt that would be all we should expect from the public sector.

After all in 2007 the US debt was just over 1% of our GDP, by 2011 it is 3% of the WORLD’s GDP!
We can’t keep that up.

There is a lot of cash out there, currently being used to pay down corporate debt, merge, buy upgraded technology and other non-hiring, non-expanding things.
ObamaCare has also got to go.
Can Obama let go of it or do we all have to wait another 1&1/2 years?